Housing Wealth and Aggregate Saving

Jonathan Skinner

No 2842, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The recent appreciation in housing value can have large effects on aggregate saving. This paper uses a simulation model to show that aggregate saving will decline substantially if life cycle homeowners spend down their housing windfalls. Homeowners with a bequest motive, however, may save more to assist their children in buying the now more expensive housing. To test whether families spend their housing capital gains, I use housing, income, and consumption data from the Panel Study of Income Dynamics. While a cross-section time-series regression implies that housing wealth does affect saving, a fixed-effects model finds no effect.

Date: 1989-02
Note: PE
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Published as Skinner, Jonathan. "Housing Wealth And Aggregate Saving," Regional Science and Urban Economics, 1989, v19(2), 305-324.
Published as Regional Science and Urban Economics, vol. 19, 1989, pp.305-324.

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Journal Article: Housing wealth and aggregate saving (1989)
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